Credit Unions Impacted by Changes to Social Security Number Issuance

by: Chuck Salvia, CID LLC

SSN Randomization means closer attention is needed for all SSN verification purposes

A Big Change Has Occurred
W-4s will now have SSNs beginning with a number that your HR Department didn’t expect to see.

New members and loan applicants will be using SSNs that cannot be traced back to the state of issuance.

A major change has occurred in the way that the Social Security Administration (SSA) issues Social Security Numbers (SSNs). This is referred to as “Randomization” and it began on June 25, 2011 to coincide with the start of the third quarter and software updates. The SSA developed this new method to extend the longevity of SSNs in all states.

Help For Credit Unions
Because Randomization renders some SSN Trace algorithms unusable and some old methods of verification obsolete, it’s more important than ever for businesses to use Consent Based Social Security Number Verification (CBSV) service from the Social Security Administration to mitigate fraud and identity theft and its associated losses – including loan losses, net charge-offs, bad hires, and the reputation of your CU.

CBSV protects vital interests of credit unions by thwarting any SSN scam that credit thieves will attempt to perpetrate. It is 100% accurate direct to official governmental record resources for verification of new hires, new members, loan originations, and fraud investigations.

How it All Started
The SSA began assigning the nine-digit SSN in 1936 for wage and tax reporting purposes only. Since its inception, the SSN has always been comprised of the three-digit area number, followed by the two-digit group number, and ending with the four-digit serial number.

SSNs were never intended to be a national identifier – but that is exactly what they have become. There are approximately 420 million numbers available for assignment. However, the current SSN assignment process limits the number of SSNs that are available for issuance to individuals by each state.

It’s All in The Numbers
SSN Randomization will affect the SSN assignment process in the following ways:

• It will eliminate the geographical significance of the first three digits of the SSN by no longer allocating the area numbers for assignment to individuals in specific states.

It will eliminate the significance of the highest group number and, as a result, the High Group List will be frozen in time and can only be used for validation of SSNs issued prior to the randomization implementation date.

Previously unassigned area numbers will be introduced for assignment (“7” and “8” in the first position) excluding area numbers 000, 666 and 900-999.

Using these ranges of numbers will allow SSA to continue issuing SSNs for approximately the next 30 years without making any changes, but these changes to the SSN may require systems and/or business process updates to accommodate SSN Randomization.

Who Gets a Randomized SSN?
Over 95% of new SSN cards issued each year are to newborns – this is the SSA Enumeration at Birth process. But now there are adults with randomized SSNs:

• Legal immigrants will receive a randomized SSN
• Situations of harassment, abuse or life endangerment (including domestic violence) can request a new SSN
• Victim of identity theft continues to be disadvantaged by using the original SSN (issuance  is rare in these cases)
• Criminals will continue to exploit the system

And, under the following circumstances, the SSA may assign a different number:

• Sequential numbers assigned to members of the same family are causing problems
• More than one person is using the same number (this impacts over 6% of the US population)
• An individual has religious or cultural objections to certain numbers or digits in the original number

(Source: http://www.ssa.gov/employer/randomization.html and http://www.IDValidation.net )

Computer Information Development LLC (CID LLC), an enrolled company in the Social Security Administration’s Consent Based SSN Verification (CBSV) service, provides instant online results for the verification needs of credit unions direct from the governmental source.  CID is the first enrolled company to have a direct interface into the SSA Master File and Death Index.

Submitted by: Chuck Salvia, CID LLC (956) 457-4116